Munchies: Candymaker aims to make marijuana treats

Baker Candies gets license to make ‘edible cannabis’ products

These Baker Candies chocolates don’t contain marijuana. In the future, however, Chris Galgoczy aims to make marijuana treats in other states.

A Cleveland chocolate maker is setting his sights higher.

Chris Galgoczy, the owner of Baker Candies Inc., a small, struggling Cleveland candymaker best known for the whipped eggs that are an Easter favorite, is aligning with a financially strong partner and hoping to market what are called chocolate marijuana edibles across the Midwest.

He’s making the move as attitudes change and states allow for the highly regulated sale of the hallucinogen for medicinal or even recreational uses.

“There’s a huge opportunity,” he said last Monday at his small brick-faced production shop and showroom in Collinwood. “It’s a billion-dollar industry in California. It can be a huge economic development engine.”

Though marijuana conjures up images of laid-back users, it’s just a business to Galgoczy.

But getting into the medicinal marijuana business is fraught with hurdles, Galgoczy is learning. Every step along the way violates federal law, from cultivating marijuana plants to processing the plant’s essence into a salable product and distributing it. That means the entire plant-to-candy-to-distribution process must take place within a single state.

Galgoczy has aligned himself with Bhang Chocolate Co. of Oakland, Calif., That company claims to be the leader in edible cannabis products nationwide.

Scott Van Rixel, Bhang’s CEO, said Galgoczy has licensing rights to the Bhang brand and its trademarked packaging in Illinois, Michigan, Ohio and Pennsylvania.

Last month, Mentor Capital Inc., a publicly traded San Diego firm that invests in cannabis businesses, invested $39 million in Bhang, taking a 65% stake in the candy company.

That move will provide funding for his growth plans — funding that is not readily available to most aspiring cannabis entrepreneurs, Galgoczy said.

“It costs $200,000 (for startup) in Illinois, $200,000 in Pennsylvania, which sucks because it kills a lot of entrepreneurs, because you can’t get financing for this industry,” he said. “We’re fortunate that our brand (Bhang) is so strong in the industry that Mentor bought into it.”

Waiting for things to loosen up

As state laws loosen and allow the production and sale of medical marijuana, Galgoczy said a company he is creating to manage the licensing from Bhang will open a candy-making operation state by state.

His operations then will affiliate with one of the companies that win a license to cultivate marijuana and sell plant material and edibles to licensed dispensaries.

Van Rixel said the licensees are on their own to make their in-state connections, but his company’s legal staff will help partners like Galgoczy weave their way through the legal thicket.

“He can use our brand name, our packaging and our marketing,” he said. “And we provide a recipe for the chocolate and what the standards should be for the cannabis content.”

The laws in the fours states where Galgoczy holds Bhang licenses do not yet allow for that kind of supply chain.

Bills to legalize medical marijuana use in Ohio have been introduced and died in recent years, and a drive for a ballot issue also has come up short. Both Gov. John Kasich and House Speaker Bill Batchelder, R-Medina, oppose any legalization.

Pennsylvania also is holding firm against legalization. But Michigan and Illinois have taken steps forward, though not far enough to allow Galgoczy to a set a timetable for moving ahead with his new business.

Michigan had passed laws that would have allowed cannabis businesses to be established. But a 2013 Michigan Supreme Court ruling determined that while the medicinal use of marijuana was legal, cultivation and dispensaries are not.

So, until the state Legislature steps in to clarify the situation, a person will not be prosecuted for possessing a quantity of marijuana if a physician has authorized cannabis therapy for the patient. But, according to Edward J. Orlett, the Ohio representative of the national Drug Policy Alliance, growing, selling and buying cannabis products are still illegal. The law, he said is designed “purely for the patient’s benefit. If you somehow get it and use it, you’re OK.”

Illinois is beginning a four-year pilot program and is expected to have in place later this year regulations that will allow it to license 22 cultivation centers and the 60 dispensaries that will sell marijuana products.

A new generation

When the laws are clarified, Galgoczy expects his new business to work with one or more of the cultivation licensees to produce and distribute Bhang brand chocolates in each of the states.

NORML, the Washington, D.C.-based nonprofit that advocates for the responsible use of marijuana, says that 20 states allow state-licensed medical cannabis dispensaries, most on the East Coast and in the West.

Baker Candies was started in 1921 by Galgoczy’s great-grandfather, Louis Bakracheff, who changed the name on the candy to Baker. In addition to a sales room attached to the production plant on Holmes Avenue, the company has a shop on SOM Center Road in Willoughby Hills.

A centerpiece of the back shop is what’s called an enrobing machine. It’s the same machine, Galgoczy said, that was featured in a famous episode of the 1950s television show “I Love Lucy.”

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